How Female Director Attributes Drive Governance and Firm Performance Through Critical Mass Theory

ABSTRACT This study investigates the influence of board gender diversity on firm performance, focusing on age diversity, doctoral‐level qualifications, economic academic backgrounds, and the presence of three or more female directors. Drawing on agency theory, the knowledge‐based view, and critical mass theory, the research examines whether these characteristics improve market‐based (Tobin's Q ) and accounting‐based (ROA) measures of firm performance. Using panel data of Malaysian listed firms from 2018 to 2021, regression models and robustness checks were employed to test the proposed hypotheses. The findings reveal that age diversity negatively affects both market and financial performance, indicating potential generational conflicts on boards. Conversely, female directors with PhDs positively influence profitability, consistent with the knowledge‐based view. Directors with an economic background enhance market valuation but show limited effects on profitability, while the presence of at least three female directors significantly improves performance, supporting critical mass theory. These results highlight that the benefits of diversity depend not only on representation but also on expertise and meaningful participation. The study contributes to the literature by integrating multiple theoretical perspectives and offering empirical evidence from Malaysia, a developing economy with evolving governance practices. Furthermore, the study aligns with the United Nations Sustainable Development Goals (SDGs), particularly SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), SDG 10 (Reduced Inequalities), and SDG 16 (Peace, Justice, and Strong Institutions), by emphasizing the role of gender‐diverse boards in promoting inclusive, equitable, and sustainable governance. Future research should expand to cross‐country analyses and explore the moderating effects of institutional and cultural contexts. Policy implications suggest that corporate governance reforms should prioritize the inclusion of highly qualified women with relevant expertise to maximize board effectiveness.